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From yesterday, homeowners with a spare room can now earn up to £7,500 tax-free by letting it out to tenants. The threshold was increased last July and since then, figures released by SpareRoom.co.uk have revealed that the number of people letting out a room in their home (a whopping 233,697) has risen by 5.2%.
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The site says that August, shortly after the chancellor made the announcement that thresholds were going up, was the busiest month for them.
How Do the Changes Affect the Private Rental Market?
George Osborne has abolished tax relief on mortgage interest and increased stamp duty land tax on anyone owning a second home. As a result, many landlords have no choice but to increase the rent on their properties in order to cover their costs. This of course is going to have a knock-on effect on the rental market, as many people on a low income will find it even harder to pay the rent in areas where housing is in short supply.
Rent a Room
Matt Hutchinson from SpareRoom.co.uk thinks the increase in the ‘rent a room’ threshold is a good thing:
“The UK is in the grip of a housing crisis nobody can see an end to. We’re not building anywhere near enough new homes so we have to make sure we’re using the ones we already have as effectively as possible. Incentivising even a small percentage of homeowners sitting on the 19 million empty bedrooms in owner-occupied properties to let them out would do just that.”
